On Thursday, Future Retail announced that Amazon had inked a deal to buy nearly half of one of its promoter holding entities, Future Coupons Ltd, with an option to acquire the entire stake in the future.

Amazon.com Inc. struck a deal that gives it the right to eventually buy a stake in India's Future Retail Ltd., as the US giant seeks to bolster its presence in one of the world's fastest-growing retail markets. The deal between Amazon and Future Group is part of the former's strategy to leverage India's offline grocery and household segment. However, Amazon has been given a call option to acquire all or part of the promoters shareholding exercisable between the third and tenth year. "We are now getting ready to roll out the platform at a larger scale", Mukesh Ambani, Chairman of RIL, had said at the recent AGM.

"Since perishable items are at stake, Future Retail's stores will help Amazon speed up its delivery timings to the consumer", added Reddy.

The e-commerce giant made an equity investment a year ago in food and grocery retailer More, owned by the Aditya Birla Group. Future Retail has said that Amazon's stake is mainly an investment in the digital payments space.

FDI rules allow Amazon to take a stake in companies if they are sourcing less than 25 percent from one entity. The share of the promoter family in Future Retail is 47.02 per cent. March 5, 2019, the Indian company approved the issuance and allotment of 3.96 million warrants to Future Coupons.

Any amount of money derived from the deal will make up a war chest with which Future Retail will go to battle with its rivals, physically and online.

Future Retail operates more than 1,500 stores in the country and owns several supermarket brands like Big Bazaar.

Amazon's investment is seen an effort to gain a firm foothold in Indian household and grocery retail. Amazon already has stake in Shoppers Stop and More.

As part of the agreement, filed with regulators, Amazon will have the right of first refusal to purchase more stake in Future Retail both directly as well as via entities. In September a year ago, Amazon said it has co-invested in Witzig Advisory Services, the entity which had acquired Aditya Birla Retail's "More" chain of stores in India.

Though Amazon's investment in Future Retail is indirect and still a while away, analysts say that it will not prevent the two stakeholders from leveraging each other's strength.

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